International Union, UMWA v. Eastover Min. Co.

603 F. Supp. 1038, 122 L.R.R.M. (BNA) 2267, 1985 U.S. Dist. LEXIS 22156
CourtDistrict Court, W.D. Virginia
DecidedMarch 1, 1985
DocketCiv. A. 83-0209-B
StatusPublished
Cited by9 cases

This text of 603 F. Supp. 1038 (International Union, UMWA v. Eastover Min. Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Union, UMWA v. Eastover Min. Co., 603 F. Supp. 1038, 122 L.R.R.M. (BNA) 2267, 1985 U.S. Dist. LEXIS 22156 (W.D. Va. 1985).

Opinion

MEMORANDUM OPINION AND ORDER

GLEN M. WILLIAMS, District Judge.

International Union, United Mine Workers of America (UMWA) filed this three-count complaint pursuant to Section 301(a) of the National Labor Relations Act, 29 U.S.C. § 185(a). Count One of the complaint seeks rescission of a transaction between Eastover Mining Company, Eastover Land Company and Duke Power Company (selling defendants) and Virginia City Coal Company (purchasing defendant). Count Two seeks damages against the selling defendants for breach of the 1981 Bituminous *1040 Coal Operators Association (BCOA) Agreement, specifically Article I thereof. Count Three seeks damages against Virginia City Coal Company for inducing the selling defendants to breach the 1981 BCOA Agreement and for interfering with UMWA’s rights thereunder.

Article I of the 1981 BCOA Agreement provides in part as follows:

This agreement shall be binding upon all signatories hereto, including those employers which are members of signatory associations, and their successors and assigns. In consideration of the Union's execution of this Agreement, each Employer promises that its operations covered by this Agreement shall not be sold, conveyed, or otherwise transferred or assigned to any successor without first securing the agreement of the successor to assume the Employer’s obligations under this Agreement. Provided that the employer shall not be a guarantor or be held liable for any breach by the successor or assignee of its obligations, and the UMWA will look exclusively to the successor or assignee for compliance with the terms of this Agreement.

Eastover Mining Company has filed a motion to dismiss based on two grounds: first, that the complaint fails to state an actionable claim against Eastover since Eastover met its obligations under Article I, and second, that Virginia City Coal Company did not induce a breach of the 1981 BCOA Agreement since there was no breach by the selling defendants. UMWA has filed a motion for partial summary judgment seeking judgment against all four defendants on the issue of liability only. UMWA contends that the selling defendants violated the contract as a matter of law when they sold the Jawbone operation to Virginia City without requiring Virginia City to assume the selling defendants’ obligations under the 1981 BCOA Agreement. UMWA also moves for partial summary judgment against Virginia City, alleging that the record shows without dispute that Virginia City induced the selling defendants to breach the 1981 BCOA Agreement. Virginia City has filed a motion to dismiss or, in the alternative, for summary judgment, contending that Eastover did not violate the Agreement and that Virginia City did not induce Eastover to violate the Agreement.

Eastover Mining Company and Eastover Land Company are wholly owned subsidiaries of Duke Power Company. For several years, Eastover Mining Company operated four mines: Arjay, High Splint, and Brookside, all in Harlan County, Kentucky, and Jawbone, located in Wise County, Virginia. All coal produced at these mines was sold to the parent company, Duke Power Company. Arjay and High Splint mines were operated under contract with Southern Labor Union while the Brookside mine in Kentucky and the Jawbone mine in Virginia were operated under a contract with UMWA. Because of a 1982 ruling of the North Carolina Utilities Commission concerning the passing on of costs to consumers, Duke Power decided to sell all of its Eastover mines. The Brookside mine in Kentucky was sold and the provisions of Article I of the BCOA Agreement were passed on to the purchaser. The two mines operating under contract with Southern Labor Union were sold without incident.

The Jawbone mine was operated on a tract of land leased from a subsidiary of ANR Coal Company. By January 1983, ANR decided to attempt to buy the Jawbone mine; negotiations began that same month. Neither ANR nor any of its subsidiaries had ever had any working relationship with UMWA. The evidence is clear that, from the outset of the negotiations, they did not intend to become involved with UMWA. ANR knew from the beginning of the negotiations that the 1981 BCOA Agreement contained a successor-ship provision (Article I). Thus, in early 1983, ANR retained a management consulting firm, Southeastern Employee Service Corporation (SESCO), to advise how the Jawbone mine could be purchased without violating the letter and spirit of Article I. SESCO wrote a letter to ANR dated Janu *1041 ary 25, 1983 (Parker, Exhibit 4) in which SESCO advised ANR how it could avoid Article I. First, ANR should require East-over to contact UMWA and advise them that it was permanently shutting down the mine; second, Eastover should have a meeting with its employees and announce that the facility was permanently closing and should send a written notice of termination of the Agreement to each employee; third, a period of at least a month should pass between the date that Eastover shut down the mine and the date of approval of the buy-sell agreement between Virginia City and Eastover.

Subsequently, ANR submitted a written proposal (Robertson, Exhibit 4) offering Eastover twelve million dollars as a purchase price and requiring as preconditions that Eastover cease all operations and terminate all employees and that forty-five days elapse between the date of the termination and the closing of the sale. On March 6, 1983, ANR submitted an additional offer increasing the price to twenty million dollars, to be paid in two installments, and including the same requirements with regard to the closing of the mine. On March 10, 1983, ANR submitted another proposal offering twenty million dollars in cash. The final agreement, dated March 17, provided that the sale would be for 22.3 million dollars and included the preconditions which had been set out by ANR throughout the negotiations. Defendant Virginia City is a subsidiary of ANR which was organized for the purpose of purchasing the Jawbone mine. After an agreement in principle was made, there was an exchange of drafts of the purchase agreement. The first draft, prepared by the selling defendants, included the following paragraph, Section 1.6(a):

Covenants and agreements of buyer. Buyer covenants and agrees: (a) to recognize the United Mine Workers of America as the collective bargaining representative of the bargaining unit employees of the Virginia City mine located at Virginia City, Virginia and to assume EMC’s obligations to those employees under the National Bituminous Coal Wage Agreement of 1981.

The foregoing language was prepared by attorneys for Duke Power Company who were aware of the contractual successor-ship provision in the 1981 Agreement. It was the intention of Duke Power Company and consequently Eastover to comply with Article I of the BCOA Agreement. This specific language was used by the selling defendants in the earlier sale of the Brook-side mine in Kentucky. The evidence is undisputed that at that time, the selling defendants thought that such a clause was required and that Virginia City would be a successor. Virginia City told the selling defendants that they would not accept the agreement with the foregoing language and further informed them that they would not assume the UMWA contract.

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603 F. Supp. 1038, 122 L.R.R.M. (BNA) 2267, 1985 U.S. Dist. LEXIS 22156, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-union-umwa-v-eastover-min-co-vawd-1985.